DAILY MORNING NOTE | 21 April 2023

Singapore shares were down on Thursday (Apr 20) as investor sentiment was dampened by expectations for further rate hikes from key central banks. The US Federal Reserve’s latest report on economic conditions – the Beige Book – published on Wednesday showed that lending volumes and loan demand generally declined across consumer and business loan types. Overall economic activity was little changed in recent weeks. In Singapore, gainers beat losers 304 to 246 in the broader market, on a trading turnover of about two billion securities with a total transaction value of S$1.2 billion.

Wall Street stocks ended lower on Thursday following lackluster corporate results from electric vehicle maker Tesla and several regional banks. The Dow Jones Industrial Average closed 0.3 per cent lower at 33,786.62, while the broad-based S&P 500 dropped 0.6 per cent to 4,129.79. The tech-heavy Nasdaq Composite Index plunged 0.8 per cent to 12,059.56.

Top gainers & losers






Integrated resort Marina Bay Sands continued to show signs of recovery in the first quarter of 2023, with mass gaming wins reaching an all-time property high. Net revenue contribution stood at US$848 million for the three months ended Mar 31, 112.5 per cent higher than US$399 million recorded in the same period a year ago, driven mainly by casino earnings. Mass gaming revenue reached a record US$549 million, parent company Las Vegas Sands (LVS) said on Wednesday (Apr 19). The group posted adjusted property earnings before interest, taxes, depreciation and amortisation (Ebitda) of US$394 million for MBS, up 225.6 per cent from US$121 million in the year-ago period.

Keppel Corporation posted a 9 per cent rise in its revenue to S$2.3 billion for its first quarter ended Mar 31, 2023, from S$2.1 billion the same period the year before. While the company did not specify its net profit for the quarter, it noted that the figure was significantly higher year on year, due to the disposal gain of around S$3.3 billion from the merger between its offshore and marine (O&M) unit and Sembcorp Marine (Sembmarine). Excluding discontinued operations and the disposal gain, net profit for the quarter was slightly higher on year, driven by a stronger performance from its energy and environment, urban development, and connectivity segments, Keppel said on Thursday (Apr 20).

Construction and engineering company Lian Beng Group has clarified that the offeror for its proposed privatisation – the company’s controlling Ong family – is not restricted from making another offer within the next 12 months if its current attempt falls through. This is because the offer will be unconditional in all respects, said financial adviser UOB on Thursday (Apr 20), in response to media reports. The 12-month restriction applies to any offer, other than a partial offer, that has been announced or posted but has not become or been declared unconditional in all respects, and has been withdrawn or has lapsed.

Capitaland Ascendas Reit (Clar) is divesting an industrial property in Macpherson for S$35.4 million, its manager said in a bourse filing on Thursday (Apr 20). The sale consideration of the building, KA Place, represents a 219 per cent premium to its original purchase price of S$11.1 million in March 2005. It also represents a 55 per cent premium to the property’s market valuation of S$22.8 million as at Dec 31, 2022. The manager said the proposed divestment is in line with its proactive asset management strategy to improve the quality of Clar’s portfolio and optimise returns for unitholders.

Oiltek International’s wholly-owned subsidiary has been awarded new contracts worth RM56.8 million (S$17.1 million) in Indonesia and Malaysia for the second quarter ending Jun 30, 2023. The contracts were obtained for Oiltek’s edible and non-edible oil refinery and renewable energy segments. The new contracts involve the design, fabrication, delivery, testing and commissioning of a new crude palm oil pretreatment plant, biodiesel plant and a new shortening plant, said Oiltek on Thursday (Apr 20).

Capitaland Investment’s (CLI) lodging arm The Ascott plans to achieve fee revenue of more than S$500 million over the next five years, about double of its FY2022 revenue of S$258 million. Fee revenue growth will be driven by new property openings as well as new signings at an expected annual net room growth rate of 8 per cent to 10 per cent in the next five years, said the company on Thursday (Apr 20). Ascott said it signed over 4,000 units in Q1 this year, which drove the company to exceed its earlier target of securing 160,000 units by 2023.

The manager of Elite Commercial Reit announced rent escalation updates for assets occupied by the UK government’s Department for Work and Pensions (DWP) and Ministry of Defence (MOD). It said on Thursday (Apr 20) that there were a total of 136 assets with a rent review on Apr 1. Of these, 134 will have their escalation pegged to the UK consumer price index (CPI). The DWP occupies 133 of these assets, while the MOD occupies one. Out of the 133 DWP-occupied assets, 11 are subject to a rent reduction. The remaining two assets, from the total of 136, are occupied by DWP and have a rent review based on open-market rent.

The manager of Lendlease Global Commercial REIT (LREIT) announced on April 20 that the REIT’s trustee, DBS Trustee Limited, has entered into a facility agreement for senior unsecured sustainability-linked term and revolving credit facilities of up to EUR300 million ($438.81 million). The facilities will go towards refinancing LREIT’s existing debt and financing the payment of any fees and expenses, in addition to the general working capital and corporate purposes of LREIT and its subsidiaries.


Blackstone’s first-quarter profit fell as dealmaking at the world’s largest alternative-asset manager slowed in a tumultuous stretch when rising interest rates roiled markets. Distributable earnings fell 36 per cent to US$1.25 billion, or 97 cents a share, from a year earlier, New York-based Blackstone said on Thursday (Apr 20) in a statement. That exceeded the 94-cent average estimate of 16 analysts surveyed by Bloomberg. Assets under management edged closer to the US$1 trillion mark, rising 8 per cent to US$991.3 billion.

Elon Musk indicated Tesla will keep cutting prices to stoke demand, even after markdowns early this year took a significant toll on profitability. Tesla’s operating margin shrank to 11.4 per cent in the first quarter, a roughly two-year low, after the company marked down its electric vehicles in January and March. Musk has done several more rounds of price cuts already this month and said he’s comfortable making less money on each car sold.

TSMC, a major Apple supplier, forecast a 16 per cent plunge in sales for the second quarter as consumers grapple with an inventory glut while a weakening global economy clouds demand outlook. The world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Co (TSMC), said industry inventory levels were currently higher than expected and would only “rebalance to a more healthy level” in the third quarter. “Moving into second quarter 2023, we expect our business to continue to be impacted by customers’ further inventory adjustment,” chief financial officer Wendell Huang said on Thursday (Apr 20) after TSMC reported the smallest growth in quarterly earnings in almost four years.

Amazon has launched its Anti-Counterfeiting Exchange (ACX), an initiative to help retail stores label and track marketplace counterfeits as part of the e-commerce giant’s efforts to crack down on organized crime on its platform, the company announced on Thursday (Apr 20). Online marketplaces in the US including Amazon face hurdles in keeping counterfeiters off their platforms and fake merchandise from entering their warehouses. The new program mimics data exchange programs by the credit card industry to find scammers and identify their tactics.

Ikea stores owner Ingka Group will spend 2 billion euros (S$2.9 billion) expanding in the US over the next three years, its biggest investment in a single country, in a bet to win American customers as other big-box retailers close stores. Sweden’s Ikea, which opened its first US store in 1985, near Philadelphia, is seeking to win market share in the US as cash-strapped consumers look for more affordable products. “It is in all the states across the US where we see opportunities, but I would say in particular the South, where we see big demand that we have not so far been able to respond to,” said Tolga Öncü, head of Ikea Retail at Ingka Group.

AT&T on Thursday (Apr 20) reported better-than-expected quarterly subscriber additions, as the US wireless carrier’s discounted offers and cheaper plans helped it lure more cost-conscious customers in a highly competitive market. After a string of divestment including the spinoff of WarnerMedia last year, AT&T has been focusing on expanding its 5G technology and high-speed home Internet service to win customers and drive sales amid a slow economic environment. The carrier, which faces fierce competition from rivals Verizon Communications and T-Mobile US, added 424,000 postpaid phone subscribers in the latest quarter, above Factset estimate of 422,800 additions.

American Express’ first-quarter profit missed Wall Street estimates on Thursday (Apr 20) as the credit card giant set aside more money to cover potential losses stemming from cardholders falling behind on their debt repayments. The growing economic uncertainty in the United States has slowly begun to catch-up with AmEx, which has so far been in a relatively better position compared with peers due to its wealthy customer base. A persistently high inflation and a rapid rise in borrowing costs have begun to pinch customers, resulting in AmEx raising its provisions to US$1.1 billion in the quarter, compared with a benefit of US$33 million a year ago.

Source: SGX Masnet, Bloomberg, Channel NewsAsia, Reuters, CNBC, WSJ, The Business Times, PSR


Silverlake Axis Ltd – A new growth driver with MOBIUS

Recommendation: Buy (Maintained), Last done: S$0.33

TP: S$0.49, Analyst: Glenn Thum

– With Siam Commercial Bank, MOBIUS has secured a major win for its cloud banking SAAS. Further opportunities arise from several banks’ legacy core banking systems reaching their end-of-life. We expect a jump in banks looking to upgrade to a MOBIUS core.

– As an AWS partner, Silverlake could reach more players in Malaysia with the AWS investment of US$6bn into cloud infrastructure in Malaysia. With the option of a multi-tenanting platform utilising MOBIUS, smaller banks now can adopt MOBIUS.

– We maintain BUY with an unchanged target price of S$0.49. Our FY23e estimates remain unchanged. Our target price is pegged to 20x P/E FY23e. We expect MOBIUS and the recovery in bank IT spending after two cautious pandemic years to be the key growth drivers for the company.

Netflix Inc – Healthy start to the year

Recommendation : ACCUMULATE (Maintained); TP: US$388.00, Last Close: US$323.12

Analyst: Jonathan Woo

– 1Q23 results were in line with our estimates. 1Q23 revenue/PATMI at 24%/24% of our FY23e forecasts. Currency was a 4% point drag to revenue growth.

– Revenue growth remained resilient at 4% YoY, supported by a 5% increase in membership base. Netflix added 1.8mn new members, mostly from Asia.

– 1Q23 operating income of US$1.7bn beat guidance by 5% on better management of expenses. FY23e FCF guidance increased by US$500mn to US$3.5bn due to improving operating leverage.

– We maintain ACCUMULATE with an unchanged DCF target price of US$388.00. Our WACC and growth rate assumptions remain the same at 12.2% and 3% respectively.

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